Can an animation be made interactive?
what i would like to know is if the devices's control panel can be
  interactively operated by the viewer like a simulation and have the
  animation respond accordingly to the controls


Yes, this is possible. Think about it like a menu with buttons. As the BGE uses 3D scenes for renderings the buttons can be anywhere in the scene.


  I would also like to know if the animation i have already created can be combined with the blender game engine


This depends on what the animations are doing. Not all features of the Blender animation system are supported. 

The major difference is that you play one action per object. This means when you want to play actions (or one action) that involve several different objects you need to play these actions at each of that objects (and start them at the same time). There is no "global animation" as in Blender.

Remarks:

I strongly suggest to play around with the BGE and see how logic gets defined.